Securing A Mortgage After Bankruptcy

January 13, 2012 by  Filed under: Bankruptcy 

Many people are concerned about how their futures will be affected after filing for bankruptcy. While some aspects of your financial life may be more challenging following a bankruptcy discharge, you are by no means marked with a scarlet “B”. Although leaving bankruptcy does put you in a unique financial situation that can better prepare you for gaining a fresh start, there are some things to consider as you begin your new financial life.

It is important to remember that you will be required to actively participate in money management skills if you are to have a chance at success. This means that once your debts are resolved, it is up to you as to whether you bounce back quickly and have a chance at credit in the future. This is especially true in the case of secured debts such as car loans and mortgages. In general, there are a few things you can do to maximize your chances at successfully obtaining secured debt loans once again.

Be patient

Life after bankruptcy is anything but a race. In fact, slow and steady is your best approach to repairing your credit and regaining control over your financial life. The type of bankruptcy you completed can have differential effects on your life after bankruptcy, which can tell you a lot about how to pursue a mortgage loan.

If you filed for Chapter 7 bankruptcy, your rating as a potential credit risk is much higher than in a Chapter 13 case. This means that you should develop a strategy to obtain low limit unsecured debt lines and make consistent payments for the next 12 months before you even consider a secured loan. The idea is to rewrite your credit history and demonstrate your ability to be a responsible borrower. If you filed for Chapter 13 bankruptcy, you may still be considered a credit risk, but your efforts at rewriting your credit history should take less time. A good rule of thumb in either case is to take at least six to twelve months to repair your credit and demonstrate your ability to maintain a responsible credit line or two.

Get Organized

While you may feel lucky to have made it out of bankruptcy and finished with all the paperwork, don’t get too comfortable yet. After your debts are discharged you have several tasks to complete. First, draft a letter explaining your financial hardship to keep in the event a potential creditor asks about your need for bankruptcy. Second, check your credit report to ensure the information is up to date. If you find any inaccuracies, dispute the information right away and have your creditors correct their reporting. This is where organization comes into play. Be sure you have kept all of your bankruptcy paperwork and provide copies to any creditors that require it to fix inaccuracies. Finally, obtain debt resolution letters from your creditors, especially those that were paid in full or considered “satisfied”. Having these letters to provide a future creditor can greatly increase your chances at obtaining a secured loan.

Christopher M, of Lee Law Firm, understands that financial hardships can affect honest, hard-working people. His early experience growing up in a very blue collar family in a rural area of Indiana, made a significant impression on his business philosophy today. As a child, he watched his family struggle as money didn’t come easy and his parent work hard to provide for their family. As a bankruptcy lawyer in Dallas, Tx his practice has given him the opportunity to directly impact the lives of many people.

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